Recently, PwC released its “Close Cycle Report for 2013” – Rankings for the 2013 R2R External Reporting Process. The results showed a general trend towards the acceleration of the group reporting cycle with many companies having regained their composure following the delays and uncertainty surrounding the 2007/8 financial crises. Even the time taken to announce audited results has come down. But the overall impression for developed nations (for example, the US and the UK) is that reporting timescales remain relatively flat.
On the whole, companies have not made significant inroads into reporting timescales although there are notable exceptions, such as Unilever, which reduced the elapsed time to announce its earnings by 10 days. Improvements such as these do not go unnoticed by the investor community says PwC.
But this year’s report is significant for other reasons. Firstly, PwC formally recognizes the term Record to Report (R2R) – a phrase which more accurately reflects the wide reach of financial reporting form data capture in subsidiaries right through to electronic filing. Secondly the report illustrates that for companies that are prepared to devote the necessary energy there are still vast swathes of time that can be carved out of the Record to Report process – valuable time that can be redirected towards business analysis and growing profitability.
It is only in recent years that the term Record to Report has become fashionable. But unlike many other business acronyms that become embedded in our vocabulary, R2R has true resonance. Companies of all sizes, right around the globe, expend large amounts of time recording and reporting their financial results and as time has worn on, the process has become more onerous and complex.
This sometimes drives the temptation to think about reporting in just one dimension, namely; the collection and disclosure of accounting balances, but weaving its way through the entire Record to Report process is an equally important concept of control. Historically, the finance function ceded much of the responsibility for monitoring and ensuring compliance with controls to the internal and external audit functions but this is no longer the case.
Smart CFOs know that they are responsible (along with the other directors) for the robustness, integrity and dependability of financial controls. Every time CFOs sign-off on the accounts they are putting their reputations on the line as well as the company’s. Controls may not feature in the Record to Report acronym but their importance is undeniable. CFOs ignore integrated controls reporting at their peril.